"Policy does not allow a choice between depression and no depression, but between depression now and a worse depression later." Joseph Schumpeter 1883-1850

"I believe that I am in hell, therefore, I am there." Arthur Rimbaud

"There are places in this world that are neither here nor there, neither up or down, neither real nor imaginary." Thomas Moore

First and foremost, my apologies for being unable to send in my column for Monday due to a hard drive crash. This piece will be an expanded piece.

There's a debate raging -- one of many, given the current landscape -- as to whether the economy and the markets are following a parallel to the Great Depression of the 1930s, and whether the government's actions will soothe the savage heart beating in the beast of the cycles. Is there a component of predestination in the cycles that cannot be tempered or reversed any more than can the ebb and flow of the tides?

The relentless downturn in global financial markets is shaking theories of modern finance based on diversification to the core. All asset classes have been pulverized. In that sense, the only bull market has been the bull market in correlation: everything has gone south. The relentless downturn in global financial markets is shaking to the core what we thought we knew and what we thought we could trust.

When I was in high school, I remember asking my dad, who ran a hedge fund, if he ever worried about the kind of speculation he saw as a boy in the 1920s leading to the kind of bust he lived through in the 1930s. His answer was quick and short: "The Fed would never let that happen again." I can only imagine what he would think today.

Does anyone today subscribe to the belief that the Fed -- supposedly created in 1913 after the Panic of 1907 to prevent panics -- can ensure that this time is different?

Will the crash in global financial markets translate into an economic deluge? That is the 13 trillion dollar question.

What's now occurring has a parallel to what happened from 1921 to 1933. Then there was a long period of exceptional prosperity and speculation followed by our country's most devastating depression except perhaps for the one that began in 1873. After the wealth creation of the 1920's and the crash, there was a bounce followed by the Great Depression. The mother of all inflection points for bulls and bears alike will arrive if and when we see the 50% or so rally I expect will play out before the end of the summer. But first, it will be important to judge the nature of how the market works off the momentum of the thrust off the March lows. That overbought condition will be worked off in terms of time as much as price.

I mentioned the $13 trillion dollar question. That's not hyperbole. Larry Summers, Obama's man on the economy, reported two weeks ago that in the last year our economy lost $7 trillion in US stock market capital and $6 trillion in housing capital. That amount has simply vanished. Gone. Gone to money heaven. It is a sublime suspension of disbelief to conclude that we could lose $13 trillion and recover by 2010.

Don't you think? But then, that's what Ben Bernanke is telling us. If this is the sale of the century, then patience may be required before a new bull market in earnest develops. It seems to me that the sale of the century may be the sales job of the century. The Toxic Tim/ Bernanke Brew snake oil that we're supposed to be buying now did nothing to assuage the Medusa as the crisis gestated.

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